Summary
explaining that, where employment agreement defines "for cause" and hinges stock cancellation on termination for cause, employer has right to cancel stock upon employee's termination for cause, as defined in the employment agreement
Summary of this case from Beach v. HSBC Bank U.S.Opinion
05 CV 9345 (DAB)
03-08-2012
CREDITSIGHTS, Inc., Plaintiff, v. PAUL CIASULLO, Defendant. PAUL CIASULLO, Counterclaim-Plaintiff, v. CREDITSIGHTS, INC., GLENN REYNOLDS and PETER PETAS, Counterclaim-Defendants.
ORDER
Plaintiff and Counterclaim Defendant Creditsights, Inc. ("CSI"), moves for summary judgment: (1) seeking a declaratory judgment that Defendant Paul Ciasullo's shares are cancelled; (2) on its breach of contract claim, on the grounds that Ciasullo breached his agreements with Creditsights when he: (a) offered to sell his stock to third parties, and (b) disclosed CSI's confidential information; (3) that Ciasullo breached his fiduciary duties to CSI through his stock transactions; (4) that Ciasullo violated his noncompetition obligations to CSI through his employment at Soleil; and (5) that Ciasullo was unjustly enriched through his unauthorized Access of CSI's Database. CSI also moves for summary judgment on Ciasullo's counterclaim for tortious interference with business relations. Ciasullo cross-moves for summary judgment on CSI's first claim for declaratory judgment that his shares have been cancelled.
I. BACKGROUND
This action, filed in November 2005, arose from the contentious separation of Defendant Ciasullo from CSI, his former employer. Nearly every fact outside of the plain language of the contracts between the parties, which are discussed below, is in dispute. A detailed discussion of the allegations in this case can be found in two prior lengthy opinions by this Court in this matter, dated March 26, 2007, and September 5, 2008, respectively.
On October 7, 2005, following Ciasullo's November 29, 2004 resignation, CSI sent Ciasullo $16.30, the par value of Ciasullo's stock in CSI, and demanded that Ciasullo return his CSI stock certificates. (Galeno Decl. Ex. 89.) Ciasullo has not returned those certificates. (Galeno Decl. Ex. 5, 79:4-18.)
With this action, CSI seeks, inter alia, a determination that it was within its rights to cancel Ciasullo's shares. In his Counterclaims, Ciasullo seeks damages for certain actions undertaken following his separation from CSI, which he claims damaged irreparably his relationship with Soleil, his next employer.
II. DISCUSSION
A. Summary Judgment Standard
A district court will grant summary judgment only when there is "no genuine dispute as to any material fact," and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a); see also Hermes Int'l v. Lederer de Paris Fifth Ave., Inc., 219 F.3d 104, 107 (2d Cir. 2000). Genuine disputes of material fact cannot be created by mere conclusory allegations; summary judgment is appropriate only when, "after drawing all reasonable inferences in favor of a non-movant, no reasonable trier of fact could find in favor of that party." Heublein v. United States, 996 F.2d 1455, 1461 (2d Cir. 1993) (citing Matsushita Elec. Industr. Co. v. Zenith Radio Corp., 475 U.S. 574, 587-88 (1986)).
In assessing when summary judgment should be granted, "there must be more than a 'scintilla of evidence' in the non-movant's favor; there must be evidence upon which a fact-finder could reasonably find for the non-movant." Id. (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986)). While a court must always "resolv[e] ambiguities and draw [ ] reasonable inferences against the moving party," Knight v. U.S. Fire Ins. Co., 804 F.2d 9, 11 (2d Cir. 1986) (citing Anderson, 477 U.S. at 252), the non-movant may not rely upon "mere speculation or conjecture as to the true nature of the facts to overcome a motion for summary judgment." Id. at 12. Instead, when the moving party has documented particular facts in the record, "the opposing party must 'set forth specific facts showing that there is a genuine issue for trial.'" Williams v. Smith, 781 F.2d 319, 323 (2d Cir. 1986). Establishing such facts requires going beyond the allegations of the pleadings, as the moment has arrived "'to put up or shut up.'" Weinstock v. Columbia Univ., 224 F.3d 33, 41 (2d Cir. 2000) (citation omitted).
A court faced with cross-motions for summary judgment need not "grant judgment as a matter of law for one side or the other," but "'must evaluate each party's motion on its own merits, taking care in each instance to draw all reasonable inferences against the party whose motion is under consideration.'" Heublein, Inc. v. United States, 996 F.2d 1455, 1461 (2d Cir. 1993) (quoting Schwabenbauer v. Bd. of Educ. of Olean, 667 F.2d 305, 313-14 (2d Cir. 1981))
B. CSI's Declaratory Judgment Claim
CSI moves for summary judgment on its first cause of action for declaratory judgment. As set forth herein, summary judgment on the first cause of action is DENIED.
Defendant Paul Ciasullo and Counterclaim-Defendant Glenn Reynolds both executed a Restricted Stock Grant Agreement dated October 4, 2000 (the "RSGA"). The RSGA states that Ciasullo purchased 2,000 shares of Common Stock of CSI, par value $0.01, and that those shares shall be subject to all terms, conditions and restrictions set forth in the RSGA and the stockholders' agreement between Ciasullo and CSI. (Galeno Decl. Ex. 11, p. 1.) Section 6(a) of the RSGA provides:
If (i) [Ciasullo]'s employment terminates as a result of [Ciasullo]'s termination by [CSI] for Cause (as hereinafter defined) or (ii) after such termination [Ciasullo] breaches the terms of, any written agreement between [CSI] and [Ciasullo] regarding noncompetition, nonsolicitation, confidentiality, ownership of intellectual property and similar matters, then all Shares then owned by [Ciasullo], whether or not then vested, shall thereupon be immediately and automatically cancelled upon payment by [CSI] to [Ciasullo] of an amount equal to the par value of any such cancelled Shares without any further action on behalf of [CSI], [Ciasullo], or any other Person.
(Galeno Decl. Ex. 11, p. 3.)
The RSGA states in Section 6(d) that "'Cause' shall have the meaning specified in [Ciasullo]'s employment agreement with [CSI]." (Id., p. 4.) On March 31, 2004, Ciasullo and CSI entered into an Executive Employment Agreement. (Galeno Decl., Ex. 10.) Accordingly, at least as of March 31, 2004, under the unambiguous language of the RSGA, CSI had the right to cancel Ciasullo's shares by payment to him of their par value upon Ciasullo's termination for cause, as that term is defined in Ciasullo's Executive Employment Agreement. The Executive Employment Agreement provides in Section 4(b):
The employment of [Ciasullo] may be terminated by [CSI] for cause at any time, immediately upon written notice delivered to the other party. For purposes hereof, 'cause' shall mean (i) [Ciasullo]'s willful and continued failure, neglect or refusal to perform [Ciasullo]'s duties hereunder which failure, neglect or refusal shall not have been corrected by [Ciasullo] within fifteen (15) days of receipt by [Ciasullo] of written notice from [CSI] of such failure, neglect or refusal, which notice shall specifically set forth the nature of said failure, neglect or refusal; (ii) any conduct by [Ciasullo] in misconduct (including repeated drunkenness or illegal use of drugs) that is injurious to the reputation or business of [CSI], that impairs the ability of [Ciasullo] to perform [his] duties and responsibilities hereunder, or that otherwise subjects, or could reasonably be expected to subject, [CSI] to claims; (iii) any failure to adhere to any written policy of [CSI]; (iv) any continued or repeated absence from [CSI], unless such absence is (A) approved or excused by the Board of Directors of [CSI] (the "Board"), (B) the result of [Ciasullo]'s physical or mental disability, as defined in this Agreement, or (C) the result of a personal or family emergency; (v) the conviction of, indictment for (or its procedural equivalent) [sic]; (vi) the entering of a guilty plea or plea of no contest with respect to, a felony; or (vii) the misappropriation (or attempted misappropriation) of [CSI]'s funds or property.
Whether or not 'cause' exists in each case shall be determined by the Board in its sole discretion.
(Galeno Decl. Ex. 10, pp. 1-2.)
On November 29, 2004, Paul Ciasullo executed a letter to Glenn Reynolds, Chief Executive Officer of CSI (the "Resignation Letter"). The Resignation Letter reads, "I hereby resign as an officer and employee of Creditsights, Inc., effective immediately. For purposes of my employment agreement, this resignation will be deemed to have the same economic consequence to me as a termination for cause under the employment agreement." (Galeno Decl. Ex. 68.)
Paul Ciasullo and Glenn Reynolds executed an agreement dated December 17, 2004 (the "Separation Agreement"), which stated that Ciasullo's last day of employment with CSI was November 29, 2004, and that Ciasullo's "separation from [CSI] was pursuant to [the] letter of resignation." (Galeno Decl. Ex. 69.) The Separation Agreement provided that no cash compensation was due Ciasullo after the regular payroll paid November 30, 2004. (Id.) The Separation Agreement provided that Ciasullo would be available to consult with CSI through March 1, 2005, for a total fee of $75,000,00, under certain enumerated terms and conditions. (Id.) The Separation Agreement also stated that Ciasullo would enter into a Voting Agreement with Reynolds and Petas for Ciasullo's CSI Shares, and stated that Ciasullo would be paid $75,000.00 to enter into that Voting Agreement. (Id.) The Separation Agreement also set forth conditions under which Ciasullo could sell his CSI Shares. (Id.)
1. CSI argues that Ciasullo was terminated "for cause" and that the Resignation Letter triggered CSI's right to cancel shares under the RSGA.
CSI argues that the RSGA, Executive Employment Agreement, Resignation Letter, and Separation Agreement are binding and unambiguous. (Mem. L. Supp. CSI Mot. Summ. J., p. 3 ("To support summary judgment, the Court need only interpret four documents.").) Nevertheless, CSI attempts to introduce facts about the circumstances surrounding Ciasullo's separation from CSI to demonstrate that Ciasullo was terminated "for cause." CSI cannot have it both ways.
Under New York law, "the initial question for the court on a motion for summary judgment with respect to a contract claim is 'whether the contract is unambiguous with respect to the question disputed by the parties.'" Law Debenture Trust Co. of New York v. Maverick Tube Corp., 595 F.3d 458, 465 (2d Cir. 2010) (quoting Int'l Multifoods Corp. v. Commercial Union Ins. Co., 309 F.3d 76, 83 (2d Cir. 2002). "The matter of whether the contract is ambiguous is a question of law for the court." Id. "An ambiguity exists where the terms of the contract 'could suggest more than one meaning when viewed objectively by a reasonably intelligent person who has examined the context of the entire integrated agreement and who is cognizant of the customs, practices, usages and terminology as generally understood in the particular trade or business.'" Id. at 466 (quoting Int'l Multifoods, 309 F.3d at 83). "No ambiguity exists where the contract language has 'a definite and precise meaning, unattended by danger of misconception in the purport of the [contract] itself, and concerning which there is no reasonable basis for a difference of opinion.'" Id. at 467 (quoting Hunt Ltd. v. Lifschultz Fast Freight, Inc., 889 F.2d 1274, 1277 (2d Cir. 1989)) (internal quotation marks omitted). It is axiomatic that "a written agreement that is complete, clear and unambiguous on its face must be [interpreted] according to the plain meaning of its terms, without the aid of extrinsic evidence." Id. (internal citations omitted).
The Court finds that the Resignation Letter and Separation Agreement are unambiguous on this point. Both documents state that Ciasullo resigned from CSI, and neither document states that he was terminated "for cause." Furthermore, the Executive Employment Agreement mandates written notice to effectuate a termination "for cause," and CSI does not even attempt to argue that such notice was given. Whether CSI could have fired Ciasullo "for cause" or whether CSI subjectively wished to do so is not relevant, as the unambiguous language of the contracts between the parties indicates that Ciasullo resigned from CSI.
CSI next argues that Ciasullo's acknowledgment in the Resignation Letter that "[f]or purposes of my employment agreement, this resignation will be deemed to have the same economic consequence to me as a termination for cause under the employment agreement" gave CSI the right to cancel Ciasullo's shares as if he were terminated "for cause." CSI argues that because the RSGA defers to the Executive Employment Agreement for the definition of termination "for cause," and the Executive Employment Agreement defers to stockholder agreements to govern Ciasullo's rights with respect to stock at the end of his employment, CSI's right to cancel Ciasullo's shares is an "economic consequence" of termination for cause under the Executive Employment Agreement. (CSI Reply Mem. L., p. 2.) Ciasullo claims that the statement amounts only to a waiver of the six months severance he would otherwise have been entitled to under the Executive Employment Agreement upon his resignation. (Ciasullo Mem. L. Opp. Mot. Summ. J., p. 10.)
"Where the parties dispute the meaning of particular contract clauses, the task of the court is to determine whether such clauses are ambiguous when read in the context of the entire agreement, and where consideration of the contract as a whole will remove the ambiguity created by a particular clause, there is no ambiguity." Law Debenture Trust Co., 595 F.3d at 467. "[T]he court should not find the contract ambiguous where the interpretation urged by one party would 'strain [ ] the contract language beyond its reasonable and ordinary meaning.'" Id. (quoting Bethlehem Steel Co. v. Turner Const. Co., 2 N.Y.2d 456, 459, 161 N.Y.S.2d 90, 93 (N.Y. 1957).
The Court finds that there is no ambiguity in the Resignation Letter and that Ciasullo's proffered meaning comports with the natural reading of the contracts. The Separation Agreement, in a Section entitled "Termination" states, "The last day of your employment with CreditSights, Inc. Was November 29, 2004 (the "Resignation Date"). Your separation from the Company was pursuant to your letter of resignation (copy attached). You acknowledge that the regular payroll paid November 30, 2004 constitutes all cash compensation due to you for services rendered before the Resignation Date." (Galeno Decl. Ex. 69, p. 1.) That paragraph, which concerns compensation, contains the only reference to the Resignation Letter in the entire Separation Agreement. Furthermore, the "Voting Agreement" section of the Separation Agreement acknowledges that Ciasullo owns 178,000 common shares of CSI and permits Ciasullo to transfer up to $500,000.00 worth of CSI shares per year. (Id., p. 2.) The Voting Agreement section of the Separation Agreement does not reference the Resignation Letter or any right on the part of CSI to cancel Ciasullo's shares due to a termination for cause. Given the clear association of the Resignation Letter with compensation issues in the Separation Agreement and the total disregard of the Resignation Letter or any implications of a termination for cause with respect to the RSGA in the Separation Agreement, it would be unreasonable and would place undue emphasis on the language of the Resignation Letter to adopt CSI's interpretation of the unambiguous language of the contracts.
2. CSI argues that Ciasullo's improper stock transactions triggered its right to cancel Ciasullo's shares under the RSGA.
CSI alleges that Ciasullo pledged and/or encumbered his CSI stock impermissibly, and that it cancelled Ciasullo's shares upon learning of these transactions in October 7, 2005. (CSI Mem. L. Supp. Mot. Summ. J., p. 6.) The RSGA says, "Any Transfer in violation of this Section 5 shall be void and of no force and effect and shall not be recognized by [CSI]." (Galeno Decl. Ex. 11, p. 5.) The RSGA does not provide for cancellation of shares as a remedy for improper transfer or encumbrance of CSI shares, but rather provides that any attempted transfer or encumbrance will not be recognized by CSI.
3. CSI did not waive its right to cancel Ciasullo's shares at the time of Casiullo's resignation.
This Court finds that the Separation Agreement did not waive CSI's right to cancel Ciasullo's shares. The Separation Agreement acknowledges that there are provisions of the Employment Agreement that survive termination. (Galeno Decl. Ex. 69, p. 3.) The Executive Employment Agreement, in turn, contains protective covenants on solicitation and competition that survive for one year following termination. (Galeno Decl. Ex. 10, p. 5.) The protective covenants section of the Employment Agreement references stock ownership and states that the employee's equity investment "is contingent on the protective provisions contained in this Agreement." (Id., p. 6.) That provision is entirely consistent with the RSGA, which allows for cancellation of shares for post-termination breaches of agreements regarding "noncompetition, nonsolicitation, confidentiality, ownership of intellectual property and similar matters." (Galeno Decl. Ex. 11, p. 3.) The agreements are unambiguous that the right to cancel shares for those enumerated reasons survived Ciasullo's resignation.
C. CSI's Breach of Contract Claim Related to Stock Transactions
CSI moves for summary judgment on its breach of contract claim with respect to Ciasullo's convertible and collateralized stock transaction with Daniel Klausner and offer to sell stock to Kenneth O'Keefe in 2001. Summary Judgment is GRANTED as to liability with respect to this claim.
The elements of a breach of contract claim under New York law ares "(i) the formation of a contract between (ii) performance by the plaintiff; (iii) failure of defendant to perform; and (iv) damages." Johnson v. Nextel Commc'ns, Inc., 660 F.3d 131, 143 (2d cir. 2011). There is no dispute as to the formation of the relevant contracts between Ciasullo and CSI or as to CSI's performance under those contracts.
The RSGA provides in Section 5:
(a) Prior to the vesting of any Shares, [Ciasullo] shall not, without the prior written consent of [CSI], offer, transfer, sell, pledge, assign, hypothecate, or otherwise encumber or dispose of the Shares (each a "Transfer") . . . . Following the vesting of any Shares, such Shares shall be subject to the transfer restrictions set forth in Article II of the Stockholders' Agreement. . . .
(b) Any Transfer in violation of this Section 5 shall be void and of no force and effect and shall not be recognized by [CSI].
(Galeno Decl. Ex. 11, p. 3.)
According to the vesting schedule set forth in the RSGA, none of Ciasullo's shares would vest before January 1, 2002. (See Id., p. 2.)
1. Ciasullo's November 2001 transaction with Klausner breached the RSGA.
On November 20, 2001, Ciasullo entered into a "Convertible Loan Agreement" with Dan Klausner. (Galeno Decl. Ex. 22.) Under the Convertible Loan Agreement, which this Court finds is unambiguous, Ciasullo borrowed $50,000.00 from Klausner. (Id.) The Convertible Loan Agreement provided for "[c]ollateral of CreditSights, Inc. shares calculated according to the following formula . . . ." (Id.) It continued, "[a]t the option of the lender [Klausner], the loan is convertible into shares of CreditSights at the most recent price of a stock offering." (Id.) The Convertible Loan Agreement thus facially and unambiguously violates Section 5 of the RSGA.
Ciasullo makes several arguments to attempt to avoid this conclusion, but none of them raise a genuine dispute of material fact on this point. Ciasullo's assertion that both he and Klausner understood that no transaction in the shares would be possible before the shares vested on January 1, 2002 is wholly irrelevant. (See Ciasullo 56.1 Stmt., ¶ 37.) Even were this Court to find that the Convertible Loan Agreement was ambiguous and thus subject to interpretation via extrinsic evidence, which it is not, the RSGA prohibited even the "offer" of CSI shares prior to the vesting date of January 1, 2002. (Galeno Decl. Ex. 11, p.3.) There is simply no interpretation of the Convertible Loan Agreement that does not run afoul of Section 5 of the RSGA.
Ciasullo's appeal to his rights under the 2000 Stockholders Agreement is similarly unavailing. Whatever Ciasullo's right to transact in vested CSI shares under the 2000 Stockholders Agreement, those rights had not yet accrued under the plain language of the RSGA, which specifically provides that the transfer restrictions of Article II of the Stockholders Agreement applied only to vested shares. (Id.) Finally, the Court has already determined that there is no basis to conclude that the Separation Agreement waived any of CSI's rights with respect to the CSI shares.
2. Ciasullo's 2001 offer to O'Keefe of CSI shares violated the RSGA.
Kenneth O'Keefe testified in his deposition to discussions with Ciasullo in 2001 regarding the possibility of a sale by Ciasullo to O'Keefe of CSI stock. (Galeno Decl. Ex. 25, 14:6-21:12.) It is clear from the deposition transcript that O'Keefe eventually gave or loaned Ciasullo $50,000.00 without the expectation of receiving CSI stock in return, that no transaction involving CSI stock was ever consummated between O'Keefe and Ciasullo, and that O'Keefe was aware that Ciasullo may not be able to transfer the CSI stock. (Id.) It also appears that O'Keefe considered Ciasullo's offer to sell CSI stock to be more of a face-saving measure or "ruse" than a formal offer. (Id., 16:21-17:3.) Nevertheless, those facts are more appropriately directed toward the issue of damages, since the RSGA unambiguously prohibited any offer or hypothecation in unvested CSI shares, and Ciasullo does not contest that he had the discussions to which O'Keefe testified. Ciasullo's discussion with O'Keefe of a possible sale of CSI stock in 2001 was a breach of the RSGA.
3. Damages
It is clear that the extent of damages, if any, from Ciasullo's breaches of the RSGA present issues of fact and credibility that cannot be determined on summary judgment. This Court can, however, dispense with CSI's argument that the breaches of the RSGA with respect to the O'Keefe and Klausner incidents entitled CSI to cancel Ciasullo's shares.
As discussed, the RSGA gives CSI the right to cancel Ciasullo's shares upon a termination for cause, as defined by the Executive Employment Agreement. When there is no employment agreement, however, the RSGA defines cause as "willful gross misconduct or willful gross neglect in performing his duties as an employee of the Company resulting, in either case, in material economic harm to the Company. . . ." (Galeno Decl. Ex. 11, p. 4.) CSI argues that because Ciasullo did not have an employment agreement in 2001 when he breached the RSGA, CSI is allowed to rely on the definition of cause in the RSGA and in effect retroactively terminate Ciasullo for cause. This is nonsensical. As discussed above, Ciasullo was not terminated for cause and instead resigned from CSI. Ciasullo's Executive Employment Agreement was in effect when he resigned from CSI. CSI did not waive its rights with respect to the RSGA upon Ciasullo's resignation, but there is no provision of any proffered contract that would allow CSI to terminate retroactively an employee for cause with the resulting cancellation of shares.
D. CSI's Breach of Fiduciary Duty Claim
CSI claims that Ciasullo breached his fiduciary duty to CSI when he: (i) engaged in the convertible loan transaction with Klausner; (ii) offered to sell CSI shares to O'Keefe; and (iii) transmitted confidential CSI information to Klausner and O'Keefe in connection with those incidents. Summary Judgment as to this claim must be DENIED.
As this Court found above, both the convertible loan transaction with Klausner and the offer to O'Keefe were breaches of the RSGA. CSI puts forth no evidence of damages for breach of fiduciary duty separate and apart from the damages alleged for breach of contract. (See CSI Mem. L. Supp. Mot. Summ. J., p. 16.) While it is possible that "conduct amounting to a breach of a contractual obligation may also constitute the breach of a duty arising out of the relationship created by contract which is nonetheless independent of such contract," Bullmore v. Ernst & Young Cayman Islands, 45 A.D.3d 461, 463 (N.Y. 1st Dept. 2007), "a cause of action alleging breach of a fiduciary duty, which . . . is merely duplicative of a breach of contract claim, cannot stand." Hylan Elec. Contr. v. MasTec N. Am., Inc., 74 A.D.3d 1148, 1150 (N.Y. 2d Dept. 2010). CSI cannot sustain a claim for breach of fiduciary duty unless there are damages beyond those caused by Ciasullo's breach of contract. See Royal Warwick, S.A. v. Hotel Representative, Inc., No. 650531/11E, 2012 WL 638805, at *8 (N.Y. Sup. Feb. 27, 2012).
E. CSI's Breach of Contract Claim for 2005 Disclosures
CSI moves for summary judgment on its claim that Ciasullo breached the Executive Employment Agreement when he provided Klausner with CSI's unaudited interim financial statements for the first half of 2005 and the Separation Agreement. Summary Judgment on this claim is DENIED.
Ciasullo first claims that these allegations are not part of the Second Amended Complaint in this matter. This assertion is disingenuous, since in opposing CSI's request to amend the Complaint to add these allegations, Ciasullo argued that no amendment was necessary and that these claims were "already pending." (Galeno Decl. Ex. 259, p. 2.)
Nevertheless, it is evident that resolution of this claim is not possible on summary judgment, as it involves issues of fact and credibility as to whether the information was "confidential" and whether Ciasullo sent the information to Klausner.
F. CSI's Breach of Contract Claim for Violation of Non-Compete
CSI moves for summary judgment on its claim that Ciasullo violated the noncompetition provisions of the Executive Employment Agreement through his employment at Soleil. It is abundantly clear that resolution of this claim will involve issues of fact and credibility as to whether Soleil was a competitor of CSI, and as to the extent of Ciasullo's work for Soleil, if any, during the term of his noncompetition agreement.
G. CSI's Unjust Enrichment Claim for Access to Research Reports
CSI moves for summary judgment on its claim that Ciasullo was unjustly enriched by his unauthorized access to CSI's proprietary research reports. Resolution of this claim involves a genuine issue of fact and credibility as to whether Ciasullo had permission to access the information, and CSI's damages, if any.
H. Ciasullo's Counterclaims for Tortious Interference and Civil Conspiracy
CSI moves for summary judgment on Ciasullo's counterclaim for tortious interference with business relations and for civil conspiracy under New York law. The elements of a claim for tortious interference with business relations are: (1) the existence of a business relationship with a third party; (2) the interference with those relations by the defendant; (3) a sole purpose of the defendant to harm the plaintiff or the use of dishonest, unfair, or improper means; and (4) injury to the business relationship. See Carvel Corp. v. Noonan, 350 F.3d 6, 17 (2d Cir. 2003). A claim for civil conspiracy under New York law requires an underlying tort and the additional elements of: "(1) an agreement between two or more parties; (2) an overt act in furtherance of the agreement; (3) the parties' intentional participation in furtherance of a plan or purpose; and (4) resulting damage or injury." Fisk v. Letterman, 424 F.Supp.2d 670, 677 (S.D.N.Y. 2006).
Resolution of these claims on summary judgment is not possible, as there are genuine issues of material fact and issues of credibility as to whether Reynolds and Petas acted by "improper means" when they instigated a criminal investigation of Ciasullo, and as to whether that investigation ultimately injured Ciasullo's relationship with Soleil.
I. Ciasullo's Motion for Summary Judgment on CSI's Declaratory Judgment Claim
Claiming that the provision in the RSGA that provided for cancellation of shares constitutes an unenforceable penalty clause, Ciasullo moves for partial summary judgment as to CSI's first cause of action for declaratory judgment.
New York courts have looked unfavorably upon forfeiture clauses involving earned wages and pension benefits. See Post v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 48 N,Y.2d 84, 89, 421 N.Y.S.2d 847, 847 (N.Y. 1979) (finding unenforceable a provision forfeiting earned pension benefits for violation of a noncompetition provision after a termination without cause); Weiner v. Diebold Group, Inc., 173 A.D.2d 166, 167-68 (N.Y. 1st Dept. 1991) (noting that commissions are earned wages not subject to forfeiture). Nevertheless, forfeiture provisions involving stock or stock options are generally upheld. See, e.g., We11and v. Citigroup Inc., 116 Fed. App'x 321, 322 (2d Cir. 2004) (upholding forfeiture of stock options upon termination); Cray v. Nationwide Mutual Ins. Co., 136 F.Supp.2d 171, 178 (noting that the rule articulated in Post does not apply to stock options or discretionary compensation); Int'l Business Machines Corp. v. Martson, 37 F.Supp.2d 613, 617-18 (S.D.N.Y. 1999) (upholding forfeiture provision involving vested stock award). Accordingly, Ciasullo's Motion for Partial Summary Judgment is DENIED.
III. CONCLUSION
CSI's Motion for Partial Summary Judgment is GRANTED on its breach of contract claim as to liability relating to the Klausner and O'Keefe incidents and DENIED in all other respects;
Ciasullo's Motion for Partial Summary Judgment is DENIED in its entirety;
Proposed Requests to Charge and Proposed Voir Dire shall be submitted by May 25, 2012;
A Joint Pre-trial Statement shall be submitted by May 25 2012 and shall conform to the Court's Individual Practices and Supplemental Trial Procedure Rules;
Memoranda of Law addressing those issues raised in the Joint Pre-trial Statement shall be submitted by May 25, 2012; and
Responses to the Memoranda shall be submitted by June 8, 2012. SO ORDERED. Dated: New York, NY
March 8, 2012
/s/_________
DEBORAH A. BATTS
United States District Judge